Euro firms amid cautious optimism over Greek debt

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GMT - 3 Hours Euro firms amid cautious optimism over Greek debt

Post by εﺓз• » ιη∂αġι яσ¢χ « • on Wed Sep 14, 2011 4:15 pm

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TOKYO: The euro firmed against the dollar in Asia on Tuesday amid cautious optimism that the Greek government would push through a set of austerity measures to pave the way for a second bailout loan.

The euro bought $1.4336 in Tokyo morning trade, slightly up from $1.4301 in New York late Monday. The single European currency also edged up to 114.81 yen from 114.74.

The dollar moved only narrowly against the Japanese currency, changing hands at 80.16 yen against 80.20 yen in New York.

The stability of the euro has been thrown into doubt by the Greek debt crisis, as investors fear that a default by Athens would have huge repercussions throughout Europe's financial sector.

Greece on Monday was given a two-week deadline to drive through drastic new cuts before it can receive a 12-billion-euro payment to ensure it does not default on its sovereign debt.

Markets worry a default on Greek debt could trigger a cascade of problems in Europe's bigger economies, including Spain. Such a domino effect could again hobble the global financial system, much like the massive crisis of 2008.

However, sentiment for the euro is improving somewhat after European leaders Monday expressed confidence that Greece will agree to more austerity measures, a dealer at a major Japanese trust bank told.

Another dealer said the euro's near-term direction was solely dependent on the outcome of a confidence vote that Greek Prime Minister George Papandreou faces later in the day.

If the Greek Parliament approves the confidence vote, investors may buy the euro back, sending the currency to above $1.4400, he said.

As Greek citizens faced strikes and power cuts, eurozone governments decided to meet again on July 3 to decide on emergency cash and work out the details of a second bailout worth more than 100 billion euros.

European Union leaders will also stage a summit in Brussels on Thursday and Friday -- with a second bailout for Greece, whose debts currently top 350 billion euros, near the top of a packed agenda.

The euro gained from the latest news on the debt problem including the announcement by the Greek opposition that it would agree to the new cost cutting, said John Kyriakopoulos, forex strategist at National Australia Bank.

"The tempering in fears of Greek default saw risk-appetite recover," he said in a note. (AFP)
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